The West Texas Intermediate Crude Oil market rallied on Friday to capture the 50-day EMA. That is a very good sign and it looks as if we are ready to break out. That being said, we will have to see how this plays out due to the fact that there are a lot of questions as to whether or not the lockdowns are going to be an issue. At this point, it does not seem to be as big of an issue, so the question now is did we see the massive selloff due to fears of the omicron variant, or are there are concerns about slowing growth in general?
When you look at the chart, you can see that the $73 level had offered quite a bit of resistance, and now that we have broken above there, it does suggest that we are ready to continue going higher. At this point, I would anticipate a move towards the $79 level, which is where the wipeout candle came into play several weeks ago. Getting to the top of that would be a very bullish turn of events for the crude oil market, and it certainly looks as if we could make that move based upon the fact that there really is not much in the way of resistance between here and there other than the 50 day EMA where we are currently sitting. That is only psychological at best, so it is very likely that we are going to continue grinding away to the upside.
If we do pull back from here, I think that the $73 level should offer a certain amount of support as it had been previous resistance, so “market memory” could come into play. If we turn around and break down below the $73 level, then we may have to reset at much lower levels, but right now that does not look like it is the most likely of outcomes. Looking at this chart, it looks to me like the recovery has been very strong, and I think the momentum will continue to pick up. Over the next couple of days, I would anticipate more of a back-and-forth type of situation, but by the time we get back to work in January, we could go much higher.
